Automakers Build Returnable Systems on Pallets

July 1, 2001
Returnable does not define a material. Rather it describes a process. Standards and systems are making the process more cost effective.

Automakers Build Returnable Systems on Pallets

Returnable does not define a material; it describes a process. Standards and systems are making the process more cost effective.

by Clyde E. Witt, executive editor

While car model diversity is what automakers strive for, the automotive industry has a great deal of commonality across its manufacturing processes and distribution techniques. And, while diversity is great for the automobile consumer, it’s commonality that is proving beneficial to manufacturers. In this, the first part of a two-part series of returnable logistics packaging systems for the automotive industry, we’ll look at what is currently happening with unit load systems.

The benefits of returnable systems are numerous and well documented. Automakers have used various forms of returnable and reusable systems since the days when Henry Ford had parts shipped in wooden crates. He would later have his workmen “recycle” those crates into car running boards and bumpers. Since the first organized systems of plastic pallets and containers began to appear a dozen years ago, the mantra has been to reduce waste. That’s true even today. Reduce waste, save money, create a more safe and healthy environment for employees.

Larry Porter currently heads the Reusable Plastic Container and Pallet Association. He says returnable packaging system users are reaping the long-term advantages such as recyclability, economic benefits and ergonomic safety.

“Auto manufacturers, in particular,” says Porter, “are going for the lean manufacturing operation. That means cutting waste in all processes and minimizing resources consumed in the non-value-added steps within the process.”

Returnable logistics packaging is part of Just-In-Time (JIT) and lean manufacturing strategies. It is also a major piece of the puzzle that enables inventory cost reductions.

In a recent study and report for the Automotive Industry Action Group (AIAG), Leta Hogg and Randal Stout report that benefits to the industry through standardization of containers, for example, can amount to $10 million to $30 million in cost avoidance, not withstanding secondary and tertiary savings associated with standardization.

Although the AIAG study focuses on container standardization, an integral piece of criteria was the base platform on which the containers would be transported. Pallets, too, have to be standardized for bulk shipments to manufacturing locations as well as for returning containers to lower tiers in the logistics chain.

The final recommendation of the AIAG’s Returnable Fastener Container Work Group was a 14 x 7.5 x 6.5-inch, attached-lid tote. Now known as AIAG 003, the container features ergonomic handles and has a capacity of 350 cubic inches. And the units stack neatly (with lids opened or closed) on a standardized plastic pallet.

The pallet system

The pallet (known as AIAG 011) for the standardized containers, measures 32 x 30 x 6.75 inches. This size was chosen to carry heavy, dense loads within a small footprint. The design features four-way lift truck access as well as a conveyable bottom. To protect the load, the pallet has an encapsulated seatbelt system to link the pallet and lid. The pallet holds eight totes per layer with a maximum of three layers.

Jim Keedle, automotive sales representative for Buckhorn, has been touting the benefits of returnable systems since the early days. “It’s not as tough as it used to be,” Keedle says, “because most users now understand the reason to switch to returnables.”

The effort today is focused on helping companies find the right size pallet and container for the parts and process in question.

Sometimes the pallet manufacturer has to take the initiative and tell the auto industry what’s best.

“We wanted to offer our customers a plastic pallet that was perfectly suited for the industry’s rightsizing and greening initiatives,” says Bob Reivik, president, Cookson Material Handling.

The Cookson pallet is a 32 x 38-inch structural foam design, built to accommodate totes that were previously used with 45 x 48 inch footprints. The pallet is compatible with four commonly used totes.

Delivering the goods

Unit loads are still the popular way to deliver the plethora of returnable containers to the line. Floor loading of trailers is limited, says Scott Krebs, Orbis product manager for pallets in the automotive industry.

“OEMs are trying to minimize the amount of material found along the assembly line, so minimal quantities in the correct size container is the way to do it,” he adds.

Some automakers prefer pallets be kept off the line, in a pre-staging area of the plant, or in off-site staging areas. Containers are removed from pallets and carried to the line with automatic guided vehicles or with carts pulled by industrial trucks. The containers are then placed in flow racks to present the parts to the operator at the ergonomically correct height.

Other manufacturers move containers to the line on pallets. The quantity of parts in containers is controlled to cover a specific time period — from one hour’s worth of manufacturing to as long as three days in the case of some common fasteners.

Heavy-duty plastic pallets are still used for moving some major automotive parts. Barry Nathens, president, PDQ Plastics, says while many automakers have moved toward smaller pallets to accommodate containers, his larger, more rugged pallets are being used to transport engines from Mexico to assembly plants in the U.S.

“General Motors has a closed-loop system to move dunnage from the plants here, down to Mexico where the engines are loaded and packed with the special dunnage, then sent north.” Also within the automotive industry, but on a different tier, PDQ Plastics’ pallets are used in the tire manufacturing process, usually within closed-loop systems to move work-in-process throughout manufacturing plants.

Keeping track

One of the challenges of returnable systems is tracking. For pallets, currently the tracking method of choice is the hot stamp. A company’s name is stamped on the pallet with the usual admonition to return the pallet. There has been some talk of radio frequency (RF) chips; however, automotive managers seem reluctant to be early adopters of the technology. The major concern is the reliability of low-cost tags in proximity to so much metal. Another reason for hesitation on the part of the car companies is the cost. As the cost of implementing RF systems drops, manufacturers may be willing to take a closer look at the benefits.

Because of the rough handling pallets receive, bar code labels see only limited duty. More often, bar code labels are used on containers. Currently the system to track pallets most often used is manual counting.

The best tracking system, according to some experts, might be no system. As the move toward standard pallets and containers gains momentum, more standard size units enter the pool, or stream of use. When the point is reached where all material is transported in the same few size containers on the same few sizes of pallets, tracking won’t be necessary. But don’t hold your breath.

There is not total buy-in on this philosophy, says Krebs. “There are lots of reason why we don’t get buy-in, not the least of which could be something simple like manufacturers wanting specific colors for each plant.”

Remember — returnable defines the process, not the material. The metal pallet has been a staple of returnable systems in auto manufacturing for a long time. The rugged workhorse first saw duty carrying engines and transmissions as well as frames and axles. The engines and transmissions are still around, but for the most part, frames are gone, and the use of heavyweight axles has been greatly reduced. Yet metal pallets continue to be used in many forging and stamping applications. The pallets offer strength, durability and adaptability to automated handling.

In the past, because of slippery surfaces, there has been some concern about mixing metal pallets with plastic containers. Metal pallets (as well as plastic) are now available with a lip to keep containers from sliding.

Man in the middle

Third-party logistics providers (3PLs) play a critical role — sometimes that of referee — within the automotive industry. This is particularly true when decisions are being made about returnable systems. A pallet that might be most efficient for loading a trailer could be all wrong for use at lineside. Container manufacturers and automakers are most cognizant of what is happening inside the building. For want’s going on outside, companies such as Exel fill a critical niche.

3PLs provide in-bound transportation management. They work with manufacturers to determine the benefits of returnable systems. They have long been experts at load utilization for bringing parts in; now they manage the return of pallets and containers to lower-tier suppliers. 3PLs provide the critical link that closes the loop.

“OEMs are notoriously poor at maintaining and updating the parts’ database,” says Rick Diefenderfer, senior director of business development, Exel. “We [3PLs] have to determine standard pack sizes, for example, because we’re responsible for optimal trailer utilization.” If there’s a change in part size or quantity, it can impact any lean manufacturing program or JIT delivery if the shipping company has not been notified. It can also impact the number of pallets and containers required.

Diefenderfer describes the whole thing as a debit and credit system. By keeping track of which parts, pallets and containers he picks up, he knows how much space will be required for pallets and containers on the return trip. He says the amount of work can vary, depending on the automaker.

“For GM,” he explains, “we use a double-batch system, meaning the containers and pallets are associated with one supplier and one manufacturing plant.” It’s a matter of looking at the label and taking the unit to either the plant or the supplier.

For DaimlerChrysler or Ford, the programs vary. If it’s a single-batch program, the pallets and containers are associated with a specific plant, but could go back to any number of suppliers that use the same size container. If it’s a no-batch program, typical of DaimlerChrysler, it means the supplier might be shipping to three different plants using the same container. In the case of the no-batch program, specialized dunnage is often used.

The 3PL becomes responsible for keeping a running tally of how many pallets and containers are required at all suppliers and manufacturing facilities.

The future for returnable packaging systems is favorable:

• More industry standards for pallets and containers should lower the entry-cost for companies that cannot currently afford a program.

• Globalization of the industry means companies manufacturing around the world will eventually create closed-loop systems.

• Education about pallets and containers is no longer the issue for returnable systems. Now it’s a process of educating about waste elimination and ergonomics. MHM

Pallet Information

For more information on pallets or returnable systems, contact the following sources:

Allibert Contico, 314-739-2910


Arca Systems,


Carico Systems,

Cookson Plastic Molding,


Grief Brothers,

Hampel Corp.,

Jarke Corp.,

IPL Products Ltd.,

Linpac Materials Handling,

Nucon Corp.,


PDQ Plastic,

Plastic Pallet Systems Inc., 702-734-5363

PolyOne Corp.,

Port Erie Plastics,

Reusable Plastic Container and Pallet Association,

Schaefer Systems,

Shuert Industries,

Stratis Plastic Pallets,

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